Ulta Beauty (ULTA) shares were falling on Friday after missing quarterly estimates for the first time in four years. One of the hurdles the company could be facing is increased competition, according to R.J. Hottovy, Placer.ai Head of Analytical Research.

"There's a lot of competition in this space," Hottovy said, adding, "we find ourselves a lot of beauty stores right now." He mentions that the increased supply could be mean there is now an "imbalance" with the demand picture.

"We're starting to see a bit of a pullback across a lot of discretionary categories," Hottovy says. He says that while there is some weakness areas like fragrance are still seeing strong demand. Plus, Ulta's competitor Sally Beauty Holdings, Inc. (SBH) is "outperforming" the rest of the beauty category following its 2022 optimization plan.

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